Debt relief is, in a nutshell, measures that are put in place to reduce or refinance debt in
order to make it easier for the borrower to repay it. At some point in their lives, people may
face a financial crisis. This could be caused by a number of factors such as illness, the loss of
a job, overspending or if the COVID-19 pandemic has affected their finances. While it can
seem overwhelming, it can be overcome. There are a number of different debt relief types.
Debt counselling: here, a debt counsellor will negotiate a new repayment plan with
your credit providers.
Debt consolidation: this involves taking out one big loan to pay off all your other
debt, negotiating a lower interest amount and limiting the monthly credit costs
payable. However, you must ensure that you will be able to afford the new payment
Debt administration: A debt administrator will apply to the court to have some of
your income set aside for basic living expenses. The rest is then used to pay off debt.
It can only be considered as an option when your total outstanding debt is less than
Voluntary sequestration: Sequestration is applied when a consumer has too much
debt and where there is very little chance of the debt being paid back. This is where
the consumer is declaring themselves bankrupt.
Payment holidays or extended payment terms: when you and your credit provider
agrees to postpone the payment date of the next instalment or to reduce the
instalment amount and pay the loan back over a longer period.
Benefits of debt relief:
Regardless of the type, the goal of debt relief is to help stop the anxiety, confusion and
chaos that consumers experience with overwhelming debt. Debt relief is designed to assist
consumers meet their financial obligations with payments that they can afford, and also
reducing and ultimately ending the debt. First do a little research to finding the right debt relief company to assist you. Ensure that they are registered as debt relief practitioners and
have the necessary credentials. Debt relief options can help over indebted consumers.
For more details on debt relief, speak to a consultant at One Debt.